Pirate Bay: big revenue claims fabricated by prosecutors

Claims that The Pirate Bay is raking in more than $3 million are completely …

The Swedish government is aiming its cannons at The Pirate Bay, but the torrent site's administrators say that they don't plan to abandon ship. The charges filed yesterday against The Pirate Bay by Swedish prosecutor Hakan Roswall (coverage at BBC,
TorrentFreak) allege that four of the torrent site's administrators are guilty of participating in copyright infringement, and for profit. This filing comes over a year after fifty Swedish law enforcement agents seized The Pirate Bay's servers during raids at ten different locations.

The move was praised by the International Federation of the Phonographic Industry (IFPI), which condemned The Pirate Bay as an "international engine of illegal file-sharing" in a statement, asserting that the site "facilitates access to many forms of copyright infringing material." The operators of The Pirate Bay contend that their activities are entirely permissible within the scope of Swedish copyright law and note that they do not host or supply to users any infringing content.

The Pirate Bay generally espouses a philosophy based on the principles of mutuality and reciprocity, broadly encouraging its users to share with each other. IFPI chairman Ludvig Werner takes a more cynical view of the site's practices and claimed that greed is the principle motivation behind The Pirate Bay's services. "The profiteers behind The Pirate Bay have no interest in free speech, and they are not running The Pirate Bay because they love music and films," said Werner in a statement. "They are totally mercenary and are driven by the desire for personal wealth."

IFPI describes The Pirate Bay as a "company" and claims that "[its] business model is based on selling advertising to brands that wanted to reach its 10 million users in more than 30 countries, while paying nothing for the content it uses to attract those users."

The Pirate Bay "company" responds

We spoke to Peter Sunde, The Pirate Bay's fearless captain, and asked him to comment on those allegations. "They do not want to even talk about charges so it's easier for them to just try to throw dirt at their opponents," Sunde told Ars in an e-mail. "To be honest, the things they've found regarding money is not even money that all together has something to do with The Pirate Bay. And some of the money is accounted for twice, because the money has been taxed, then sent to another company because that was the company that took care of the payments, and then sent back for paying bandwidth."

Sunde says that claims made by the Swedish government and IFPI pertaining to the revenue generated by advertising on the site—which include estimates that The Pirate Bay's annual revenue exceeds $3 million—overstate the real situation. Although Sunde did not provide Ars with specific financial details regarding The Pirate Bay's operational expenses, he did argue that the site's high bandwidth, power, and hardware costs eliminate the potential for profit. The Pirate Bay, he says, may ultimately be operating at a loss.

The charges faced by Sunde and his collaborators hold a maximum penalty of two years in prison and penalties of several hundred thousand dollars, but he is unconcerned and his belief that Swedish law is on his side remains unshaken. The financial penalties are based off the assumption of profit, which Sunde clearly suggests is bogus. As the case moves forward, we expect to hear much more about the real story behind The Pirate Bay's booty. This is a topic we've addressed before.

An unsinkable ship?

Previous attempts to halt The Pirate Bay's activities have met with very little success. Although the Motion Picture Association of America and other content industry trade groups initially trumpeted the 2006 raids as a major victory and claimed that the site had been permanently dismantled, it took only three days for The Pirate Bay to resume operation. In a blog entry
posted yesterday, the site's administrators express confidence that the upcoming case will be decided in their favor and assure users that the site will continue to run regardless of the outcome. "In case we lose the pending trial (yeah right) there will still not be any changes to the site," the administrators wrote. "The Pirate Bay will keep operating just as always. We've been here for years and we will be here many more."

The case isn't likely to go away easily. The volume of resources that the Swedish government has invested in the eighteen-month investigation, which produced over 4,000 pages of documents, is significant.